What Are Sovereign Wealth Funds?Sovereign wealth funds (SWFs) are government-owned investment funds. They manage national savings, usually from surplus revenues like oil profits or trade surpluses. Their primary goal is long-term wealth protection and economic stability.Unlike central banks, which focus on monetary policy and currency management, SWFs invest strategically. They allocate funds into:Real estateStocksInfrastructure projectsLocal businessesThese funds focus on steady, low-risk growth rather than high-risk investments. Governments use SWFs to ensure financial security beyond immediate economic needs.Since SWFs serve broad investment goals, they should not be confused with a Bitcoin reserve. While a strategic Bitcoin reserve would focus on crypto assets, SWFs typically invest in diversified portfolios.Sovereign Wealth Funds in the USSeveral US states already have sovereign wealth funds that follow the classic definition. These funds use revenues from resources like oil, gas, and minerals to secure long-term financial stability. Here are some key examples:StateSovereign Wealth FundSource of RevenueAlaskaAlaska Permanent FundOil revenuesTexasPermanent School FundOil & gas revenuesWyomingPermanent Mineral Trust FundMineral extractionNorth DakotaLegacy FundOil & gas revenuesNew MexicoSeverance Tax Permanent FundResource taxesSome states also manage stabilization or “rainy day” funds, which function similarly. In total, around 23 states have some form of investment fund, though their structures and mandates vary.Bitcoin Reserves in the USSeveral states are considering legislation related to Bitcoin reserves. So far, 15 states have introduced bills that explore digital asset investments. Arizona and Utah are leading this movement at the chamber vote level.Arizona’s Bitcoin Reserve ProposalProposes a strategic Bitcoin reserve fund.Capped at 10% of public funds.Only implemented if the federal government creates a national Bitcoin reserve.Aligns with Senator Cynthia Lummis’ Bitcoin Act, which encourages state participation in a federally managed crypto program.Utah’s Digital Asset BillAllows up to 10% of major state funds to be invested in digital assets.Protects self-custody rights for crypto holders.Ensures that blockchain nodes are not classified as money transmitters.Covers digital assets broadly, not just Bitcoin.Other State ProposalsNorth Dakota’s bill (HB1184) failed to pass.Wyoming’s bill (HB201) also did not move forward.The Future of Bitcoin ReservesThe rapid development of Bitcoin reserve legislation suggests a shift in how governments view crypto. Bitcoin is no longer seen only as a speculative asset. Some policymakers consider it a potential strategic reserve.However, whether these proposals become law depends on:What is clear is that one no longer considers “if” Bitcoin has a role to play in public finance, but rather “when” and “how.
